Trudeau Liberals spread 'misinformation' on cost of next year's 'booze tax' hike

The CTF asserts that the prime minister is 'rubbing margarita salt in the wound' by using high inflation to binge on higher alcohol taxes. But according to the Government of Canada, alcohol industry groups have 'exaggerated the level of taxation' applied to alcoholic beverages.

Trudeau Liberals spread 'misinformation' on cost of next year's 'booze tax' hike
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The Trudeau Liberals are rewarding struggling Canadians with several tax hikes heading into the new year. With a steeper booze tax on the way, residents will have to do more than cancel their Disney+ subscription to have a good time.

According to the New Year's Tax Changes report, the average Canadian family pays 43% of its budget to taxes.

"Canadians can't afford gas or groceries, and the government is making things worse by hiking taxes," said Franco Terrazzano, Federal Director of the Canadian Taxpayers Federation

Food prices in Canada skyrocketed in 2022 owing to runaway inflation. Record numbers have accessed food banks to feed their families - a trend that will continue next year as food prices are projected to rise again.

Canada's Food Price Report 2023 predicts a 5% to 7% food price increase in 2023 following 10% increases this year, where the most substantial increases occurred in vegetables, dairy, and meat.

The federal carbon tax will also increase from $50 per tonne in 2022 by $15 per year until it reaches $170 per tonne in 2030, costing Canadians 14 cents extra per litre at the pumps.

If that isn't enough, residents will also enjoy a "liquor escalator tax" that will increase the excise taxes on beer, wine, and spirits with inflation on April 1, 2023. Taxes already account for about half the price of beer, 65% of the cost of wine, and more than three-quarters of the price of spirits. 

"Tax hikes will give Canadians a hangover in the new year," said Terrazzano, who noted that while other countries are cutting taxes, Ottawa is sticking Canadians with higher bills.

He urged Prime Minister Justin Trudeau to "put taxpayers first and do the right thing" by cutting taxes.

Despite thorough pushback from the public, the Trudeau Liberals claimed that scientific evidence strongly favours more taxes to reduce alcohol-related harms. First passed in the 2017 federal budget, the alcohol escalator tax automatically increases excise taxes on beer, wine, and spirits yearly with inflation. 

An assessment of the policy said excise taxes could have been more effective at improving public health and safety outcomes. A government backgrounder added that Canada has a "legacy of past failures" for not indexing alcohol to the cost of living sooner. 

However, Terrazzano needs to buy the government messaging.

"This alcohol escalator tax hike is undemocratic and allows politicians to duck accountability," he said. "If politicians think Canadians aren't paying enough tax, they should have the spine to vote on the tax hike."

With inflation at 6.8% as of November and not likely to fall below pre-pandemic levels in the immediate future, CTF estimates next year's liquor tax will increase by 6.3%. "Ottawa's alcohol tax bender needs to end," said Terrazzano. 

The CTF asserts that the prime minister is "rubbing margarita salt in the wound" by using high inflation to binge on higher alcohol taxes. But according to the Government of Canada, alcohol industry groups have "exaggerated the level of taxation" applied to alcoholic beverages.

"Distillers claim the taxation rate is 80%, but our estimates show this to be 20% to 30%," reads a government backgrounder. "Brewers claim the taxation rate is 47%, but our estimates show this to be 16% to 18%."

But the Canadian Chamber of Commerce rejected the government's premise in 2021, adding that the country has some of the highest alcohol taxes in the world. 

"On average, 47% of the price of beer in Canada is from federal or provincial taxes. Approximately 65% of the cost of wine is due to taxes, and on average, 80% of the price of spirits is taxes," said Perrin Beatty, President, and CEO of the Canadian Chamber of Commerce.

"Canadians already pay about $20 billion per year in alcohol taxes, [and] the escalator tax increases that tax burden even more."

Hundreds of thousands of businesses of all sizes across the country were affected by the COVID-19 health, and economic crisis reads a Chamber release. Beatty adds that employers in the hospitality industry, agricultural and other supply chain members, alcohol producers, and consumers need Finance Canada to repeal the alcohol escalator tax.

With the government response to the pandemic dramatically cutting bar and restaurant sales for all beverage alcohol, the Canadian Chamber of Commerce said another tax hike would increase hospitality industry costs, reducing their ability to attract customers and retain employees. The alcohol escalator tax has increased several times over the past three years and will further propel the price of beverage alcohol.

According to the release, "An increase in excise duties will also hurt Canadian brewers, wineries and distillers, who will lose access to the capital they desperately need to invest in their operations, employees and products as they try to navigate the vast sales losses to restaurants and bars."

Beatty adds that now is not the time to increase alcohol taxes on ordinary Canadians "We request the government repeal this automatic escalator at the earliest opportunity." 

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  • By David Menzies

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